2024 (8) TMI 1432 - HC - Income Tax

Penalty u/s 271B - petitioner failed to submit the audit report in time - AO concluded that the filing of the tax audit report belatedly shows the mala fide intention of the assessee to evade tax on his income - HELD THAT - In view of the fact that the gross income disclosed by the assessee was accepted subsequently by the Assessing Officer and the total tax liability shown in such return was also accepted, the conclusion that the assessee filed the tax audit report belatedly with the mala fide intention to evade tax cannot be sustained. In clause (iii) of paragraph 5, the Assessing Officer concluded that the plea that the return of income and audit report could not be filed in time due to severe low back pain of the assessee appears to be a fabrication to mislead the penalty proceedings. In support of the submission that the assessee suffered lower back pain, the impugned order discloses that photocopies of the doctor's prescription was provided. Once again, in view thereof and in view of the factual position with regard to the return of income, this conclusion cannot be sustained. Thus, the order impugned calls for interference because speculative findings contrary to the facts on record were recorded therein. Therefore, the writ petition is disposed of and the order impugned herein is quashed. As a corollary, the matter is remanded for reconsideration. The Assessing Officer is directed to provide a reasonable opportunity to the petitioner, take into account all material facts and applicable provisions, including Section 273B and issue a reasoned order.

Summary

Issues:
Challenge to penalty under Section 271B of the Income-tax Act for late submission of audit report due to health reasons.

Analysis:
The petitioner, subject to audit under Section 44 AB, failed to submit the audit report on time due to health issues. The respondent imposed a penalty under Section 271 B. The petitioner argued that the delay was due to left-sided radiculitis, preventing coordination with the auditor. The respondent contended that the petitioner had a history of late submissions and could have uploaded the report by the deadline. The court noted the delay and the penalty provisions under Section 271B, which allows penalties for non-compliance unless for a reasonable cause under Section 273B.

The impugned order concluded that the delay in submitting the audit report was with mala fide intent to evade taxes. The court found this conclusion unsustainable as the gross income and tax liability were accepted by the Assessing Officer. The order also questioned the petitioner's health reasons, deeming them a fabrication. The court disagreed, noting the medical prescriptions provided. Speculative findings contrary to the facts led to the order's interference, quashing the order and remanding the matter for reconsideration by the Assessing Officer within two months, considering all material facts and provisions, including Section 273B.

In conclusion, the court found the penalty order unsustainable due to speculative findings and directed a reassessment by the Assessing Officer. The petitioner's health reasons and late submission were considered valid, leading to the quashing of the penalty. No costs were awarded, and the matter was remanded for a fresh decision within a specified timeframe.